Muh Tweets

Tag: economics

Goodbye to the Age of Newspapers – I just don't buy the lament of the newspapermen. If the papers were subsidizing the collection of "real" news with ads, how sure are we that people ever wanted news? Why exactly should we believe that there ever was some public interest at heart in journalism? I'd say it's just as likely that the fragmentation of digital media, and the trend toward tabloid fluff, is an indication that nobody (or at least, not enough people) really cared about the "serious" news in the first place. Disaggregated, opinionated, (truly) non-profit journalism will certainly be different than the muckrakers, or Big Media, but it's unclear to me that it will be worse in any way for government transparency, or democratic interchange. (tagged: technologymediagovernmenttransparencydemocracy )

There's no reason for non-recourse – Options are valuable. That's why we have markets for them. The trillion dollars worth of non-recourse loans (cf pawnbroker) which the Fed is apparently about to offer up to the finance industry, will, because they are non-recourse, lead to a misvaluation of the assets being bought, even if they're being bought by private entities, because the penalty for non-repayment is simply forfeiting the asset (which might very well end up being worthless). The Fed is acting like a pawn shop, but a dumb one: what pawn shop in its right mind would let you exchange your cubic zirconia for half the value of a diamond? (tagged: financeeconomicscrisisbailoutfedgeithnerbernanke )

There are only two real pools of capital: alternatively natural or human, external or internal, material or informational.

Natural (external, material) capital is the pre-existing wealth of the world, which was not dependent on our organization or existence: the metals we mine, the trees, the fresh water, the fisheries, solar energy, the fossil fuels, the potential for agricultural produce (as a co-location of soil, water, and climate). Human (internal, informational) capital is the value inherent in technology, skill, organization, understanding, and knowledge.

LEED Platinum Prefab Home Now Available – Taking all the design work out of building zero energy homes should make it a lot easier to build them, but the contractors doing the actual construction still need to understand what they're doing, and how their application of building techniques will affect the end performance of the building (and their profits need to be tied to that performance somehow) (tagged: greenarchitectureleedconstructionbuildings )

Kidnapping Chrysler – Of course Cerberus (private equity firm that owns Chrysler, not three headed dog guarding hell) has a "fiduciary obligation" to seek a handout from the Feds. And by Jove, the Feds have a fiduciary obligation to refuse to give it to them! (tagged: bailoutchryslercerberuscrisiseconomygm )

What really happened at Ma.gnolia – The social bookmarking service Ma.gnolia was, despite its surprisingly large user base, basically run like Ideotrope – one guy with a server, and some (in retrospect) pretty janky backups. A couple of weeks ago, the 500GB MySQL database file got corrupted, the backups failed, and the site imploded. Lessons to be learned indeed: number one is don't do your own IT, now that S3, EC2, the Google Apps Engine, and other such scalable enterprise systems are available. We gotta get that server retired… (tagged: backupsmagnoliadataservershosting )

Baseline Scenario for 2009-02-09 – A rundown of the current global financial situation, and governmental attempts to get things under control. These guys aren't particularly optimistic at the moment about our ability to acknowledge just how beholden our supposedly powerful and developed governments have become to the banking industry. We're acting like Indonesia or Russia with their oligarchic overlords. (tagged: financeeconomyeconomicscrisis )

China Needs U.S. Guarantees for Treasuries – Huh? What's a "treasury guarantee", and why would it be any more trustworthy than the promise to repay the debt implicit in any bond? Probably what they really mean is "Um, we're not really planning on buying any more of your Govt. debt, thanks. At least, certainly not at the pitiful interest rates you're currently offering." And so the Fed will "buy" it instead. I think this is called "quantitative easing" in doublespeak. Also known as printing money… (tagged: financeeconomychinafederalreserveeconomics )

I first came across Thomas PM Barnett via his TED talk last year. He’s an engaging speaker (PowerPoint performance artist might be more accurate), and he has interesting ideas about how globalization works, and what the US military’s role has been, is, and should be. I’ve followed his blog on and off ever since. I’m fascinated with him because a huge amount of what he says rings true, and unusually frank, but a little bit of it seems jarring. Last night I watched his full-length brief and took notes, to try and figure out what exactly it was that I disagree with.

Trying to keep track of all the shenanigans innovation going on at the Federal Reserve is difficult. Econbrowser and Interfluidity among others have been trying to help… but every time I read about how our money system works, I find my head spinning in incredulity. And that’s just when I’m reading about how it’s “supposed” to work. It’s been getting more confusing lately.

The US road to recovery runs through Beijing says Asia Times Online, and Thomas Barnett emphatically agrees. Everyone is talking about how to reorganize the global economy, but mostly the discussion is about how to most efficiently export our recently collapsed model of growth to the developing world. Better this time around for sure, we say, but not fundamentally different in any way. The Chinese need (and want, it turns out) more domestic consumption and consumer debt.

With the collapse of Bear Stearns and the US automakers and airlines tanking, and the prospect of a trillion dollar bailout of Fannie Mae, Freddie Mac, and who knows how many other large lenders, all because they are, putatively, “too big to fail” (by which is meant, obviously, not that they are so large as to be incapable of failing, but that they are so large as to make the consequences of their failing worse than the immediate, visible consequences of bailing them out), I’ve started wondering if perhaps what we really need is an update to our anti-trust laws, to the effect of: if you’re too big to fail, you’re just plain too big.

Instead of allowing corporate juggernauts to form, and then eventually being “forced” to save them from their own follies, why not just keep these captains of industry small enough that we never need to save them. The Feds already have to approve the bigger mergers and acquisitions – they already have this power by-and-large. Keeping our companies a little smaller would increase competition, and diversity within the corporate ecology of our markets. GM doesn’t want to make fuel efficient cars? Fine – their small-cars division can spin off and do its own thing. Sink or swim in its competition with Toyota, while GM itself just sinks, into an ever shrinking ocean of $150 oil.

Instead, we give taxpayer cash to large companies that have made bad business decisions, and absolve them of their obligations to pay the pensions they promised to their lifelong employees. We inflate the dollar and erode both our spending power, and our savings, while simultaneously crippling the long term competitiveness of our biggest industries. I don’t think the marginal increase in productivity from economies of scale that happens between being a $20 billion company and a $40 billion company is really worth it, if it means we’re all eventually on the hook for bailing out the $40 billion company, when we wouldn’t have to shovel mountains of cash at the two $20 billion companies… one of which might actually have made some good business decisions.